How are budget pressures impacting current project plans?

The cost of living crisis is creating pressure on people in communities, as people struggle more and more to manage household finances.

At the same time, local authorities are facing their own financial pressures from soaring costs.

Recently, the Local Government Chronicle highlighted that “Top tier councils expect at least £1.7bn in additional budget pressures from spiralling inflation. London’s 32 boroughs are facing £400m of pressures on top of what was already planned for when budgets were set in April.  Municipal authorities are looking at £570m and counties £729m totalling at least £1.7bn of additional costs in all".


So, what is driving inflationary pressure for Councils, and what is the impact?

Through rises in material costs for capital programmes, staff costs and energy costs amongst many other spending streams, authorities are reporting vast reductions in confidence in meeting their financial requirements, with many under serious and unsustainable threat.

Centrally, this has also meant that government have proposed shelving plans for some wider strategies such as the national Food Strategy which aimed to tackle some of the hardest hitting current Public Health issues, particularly the obesity crisis. This is already leading to shifts in strategic priorities, both centrally and at a local level.

Local authorities face competing priorities more than ever before, and local government is left with a whole new spectrum of dilemmas on where to spend budgets and where to try to absorb some of this wide-scale financial impact.

Councils are having to rethink some of the major plans they have been making under the Levelling Up agenda and other priorities, and are beginning to lobby for funding to ease the pressures they are facing, so that they can continue to provide services that support and services to residents.


What about the impact on National Living Wage?

An additional pressure is also on the horizon. The possible upcoming rises in National Living Wage could add another minimum £400m costs to authorities nationally as wages could be increased over the next two years. This could lead to further need for service cuts, generating more dilemmas for Councils.


So, how are Local Authorities adapting their support for communities in the face of these pressures?

Given the difficulties people are facing, local authorities and their partners are finding new means of helping people to cope to ease the socio-economic impact this has on people’s lives. Local authorities are forging new partnerships and are innovating with new ways of working to deliver help to people who need it most. 

Many Councils also have community support Hubs and partnership networks in place that were set up and developed in the COVID pandemic. Many of these are now shifting focus to support people with the cost of living crisis.

We have also seen a proliferation of grant funding in the local government sector, with spending being rolled out to help ease pressures in the community, particularly for vulnerable households and those facing highest difficulty. Whilst not without issues, this grant funding has been reaching recipients to ease short term financial burdens in the short term and helping people to cope day-to-day. This is also raising questions of how people will cope in the longer term – something that Councils will need to address.


The key question is - what can Councils do now?

We see that Councils can take a three-fold approach to surviving and thriving in this period of financial difficulty.


1. Be transparent 

Being clear and honest about the pressures faced is key to ensuring communities can understand the changes they may see in Council service provision. People can relate to financial uncertainty - as we know, it affects us all. Councils can adapt their communications strategies and community engagement work to try to acknowledge and explain some of the impacts they are experiencing and how it is affecting services and provision in the community. This helps to explain the reasoning behind decision making, which people in the community always value


2. Involve people

Making sure that people in communities can shape services is essential!

In order for local authorities to effectively problem-solve some of the challenges arising from the cost of living and inflation crisis, people need to be at the heart of shaping provision so that services are responding to need. This means making sure that decision-making is based on real people’s real experiences. Councils should prioritise this co-design approach in all major transformation plans, and should make sure that they are proactive in shaping services together with partners and the communities.


3. Think short AND long-term

Thinking about how short term financial difficulties can be addressed is one thing, but Councils also know they need to keep a focus on the further future, developing strategies and plans for how to support themselves and others over the longer term.

Some questions Councils can ask of themselves include:

  • What needs to happen right now to stay afloat?
  • How does this relate to our longer term Council Plan?
  • How will short-term changes impact our ability to deliver our longer term strategy?
  • What needs to change as a result? How can we realign?
  • How can we mitigate the impact on our operations?
  • What are our priority options?
  • How can we make sure people in community remain supported beyond the short term?


What next?

These are difficult questions to think about and answer, but the COVID pandemic has shown, with the collective experience and skills we see in Councils across the country, what extraordinary things can be achieved when needed. Even under extreme organisational pressure.

For many local authorities and partners, this will be a key time to reassess transformational priorities, and to realign change activity and strategy against the emerging threats the sector is facing.

If your organisation would like some help to reassess your transformational priorities, or to realign your change activity and organisational strategy, visit our website at, or contact us at for a 20-minute discovery call on how our team of public sector change specialists can support you.

By Lydia Davey | 1st July 2022

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